Why you should NOT demo trade for too long

Emotions is one of the biggest factors that stands in the way between a profitable trader and one that isn’t. There are a multitude of strategies that work, but often the biggest killers of success is the emotions of the individual executing the strategy and their ability to function like a machine, emotion free, and to follow the rules to a tee.

One trader might use a strategy successfully while another will apply the same strategy and fail. It all comes down to emotion and following your rules and your edge, a very simple concept but most fail at it. 

This is why contrary to what is said by most traders, you should not stay on a demo trading account for too long, because a demo account gives you ZERO emotional kick back when you win and ZERO emotional kick back when you lose. I always suggest to move to a live account once you can apply your strategy to a demo account adequately. Even if it’s a really small live account such as risking a max of $1 per trade, that’s still better than a demo account, because then you get a real life feel of EMOTIONS.

Here are the emotional tropes that traders experience on live accounts that they don’t experience on demo, and from the multitude of trader’s we have trained, we see this over and over again. These trader’s all did well on demo, some even netting 50% returns on their account, but once they moved to a live account they could not create those same results. Here are the emotional kick backs that you feel on a LIVE account:

  1. You are on a winning streak: Feeling invincible, start over risking per trade and then taking a big loss and losing the gains made.
  2. You take a loss: Get angry and over risk on the next trade aka “revenge trading” which results in bad quality trades and can cause an even bigger loss (forgoing risk management).
  3. You take a loss: A very good trade comes along that looks exactly like the trade you just took a loss on but you pass on it thinking it will be a loss again, but instead it ends up going on to be a monster win (remember that good quality trades can lose and bad quality trades can win).

Don’t demo for too long and start live even with a very small account. Remember that if your risk management is air tight and you have a set percentage of risk each trade as well as a good stop loss in place, you will be fine.